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Assessing mgmt isn’t a science & often access is limited. Look for thoughtfulness. Look for people you can tell are not motivated just by money. Is there an entrepreneurial culture? Look for people who think long term. Lots of mgmt teams will say the right stuff, but is it true?
Reading the transcripts, CEO interviews, CEO letters, presentations on YouTube and other company materials, attending a few meetings, studying the company history etc should be enough to start to get a feel for whether you like management or not.
Some questions to think about...
Ask management which companies or CEOs they admire? This question is not trying to get an idea for a stock pick, it is to try to understand who management have been learning from and why, what books are they reading?
Glenn Greenberg asks this on share repurchases “...whether the cash return on a capital project is as good as the return from buying back stock, they generally look at us as though we’re speaking in a foreign tongue.”
Pat Dorsey looks for thoughtful answers to questions. Ie answers and actions specific to the business and the industry it operates in.
Quotes from Marathon in Capital Returns:
Marathon “...go into meetings looking for answers to questions such as: does the CEO think in a long-term strategic way about the business? Understand how the capital cycle operates in their industry? Seem intelligent, energetic and passionate about the business?”
“The primary purpose of our company meetings is to assess the skill of managers at investing money on behalf of stakeholders. Meeting management is not a scientific process...it involves making judgements about individuals, an activity which is prone to error.”
“Too often, the CEO mistakes a short-term target...with a strategy...Real strategy...involves an assessment of the position one finds oneself in, the threats one faces, how one plans to overcome them, and how opponents might in turn respond.”
Qus from Welch: “...what does your global competitive environment look like? In the last 3 yrs, what have your competitors done to alter the competitive landscape...what have you done to them? How might they attack you in the future? What are your plans to leapfrog them?”
“To unsettle the more promotional CEOs, we like to ask what is not working and wait to see whether they have given the matter much thought.”
“How the CEO interacts with colleagues, such as the CFO or IR personnel, often reveals their leadship qualities.”
Marathon also look for signs of curiosity and humility. On the other side they look for signs of vanity. Management approach to costs and frugality are also important.
Old interview with @mjmauboussin
Includes some thinking on what to ask management:
https://www.fool.com/investing/2016/10/18/interview-with-michael-mauboussin.aspx
Includes some thinking on what to ask management:
https://www.fool.com/investing/2016/10/18/interview-with-michael-mauboussin.aspx
Great link to a podcast and transcript on assessing management teams [note there is a transcript]: https://www.mawer.com/the-art-of-boring/podcast/the-art-of-the-management-team-interview-ep20/
Some great ideas on lines of questioning and more questions here: https://twitter.com/chrispavese/status/1148970641992953857?s=21
How Phil Fisher asked his best questions: “But his very best questions always popped out of his mind, unprepared, never having been written down in advance because they were the angle he picked up on the fly, as he heard an answer to a lesser question.”
Interesting White Paper on listening and asking questions: https://www.mosaicprojects.com.au/WhitePapers/WP1012_Active_Listening.pdf
Adding these two filters to the general thread on questions: https://twitter.com/bluegrasscap/status/1173601124194095106?s=21
Adding some colour around compensation and incentives to this thread on assessing mgmt - note Third Point questions if compensation relies on TSR. https://twitter.com/areviewortwo1/status/1184344088650354688?s=21
Great presentation [added to this thread on questioning / assessing management] https://twitter.com/ClarkSquareCap/status/1265841281240088579?s=20
Questions Baillie Gifford ask: https://twitter.com/mastersinvest/status/1277465021396574208?s=20
Useful framework for management interviews: https://twitter.com/AReviewOrTwo1/status/1250745387473932290?s=20
Good quotes / questions https://twitter.com/breadcrumbsre/status/1323163350679855104
Four criteria for assessing management https://twitter.com/AReviewOrTwo1/status/1303991843512815616
